CONGRESS AND THE WHITE HOUSE have been busy lately patting themselves on the back for staving off financial armageddon by handing out taxpayer money to Wall Street like it was Halloween candy. But while theyre trumpeting the fact that some financial firms have returned a tiny portion of the trillions of dollars that were given to banks, reality is setting in that Americans will never see that money again and will be paying it off for many, many years to come.
In late September, legislators quietly assessed whether they should begin phasing out some government aid programs like the Troubled Asset Relief Program, or TARP, which appropriated $700 billion all of which had to be borrowed from bankers and foreign countriesto purchase bad investments, known as toxic assets, owned by financial firms.
So far, more than 600 potentially insolvent banks have been propped up by TARP. However, the program is set to expire at the end of this year, and doubts remain as to whether many lending institutions will be able to hold on without continued handouts from taxpayers.
TARP was initiated in late September 2008 following the collapse of the stock market. Since that time, a handful of firms have reimbursed taxpayers for money they received under the program to the tune of about $70 billion, or 10 percent of what has been given out. The debate in Congress comes as the chief bureaucrat tasked with watching over TARP recently conceded during Senate testimony that taxpayers will most likely not be paid back for all of the money they gave Wall Street.
Speaking before the Senate Banking Committee on Sept. 25, Neil Barofsky, the special inspector general for TARP, said that it is extremely unlikely that the taxpayer will see a full return on its TARP investment.
By now, many policymakers inside the Beltway presume that Americans have forgotten how Bushs Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke originally sold the massive payout by claiming that taxpayers would eventually reap returns on their investment in Wall Street.
Today, were being told that we should be happy that we will get back even some of that money. So now we know the truth about the TARP: It wasnt enacted to protect the economy. It was created for the purpose of covering up the greatest theft of taxpayer dollars in the history of the United States. (American Free Press, 10.02.2009)